tv Squawk Box CNBC September 13, 2012 6:00am-9:00am EDT
welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. so today's agenda, we are following the latest developments out of the middle east. reports coming in during the last hour or so saying protesters have stormed the u.s. embassy in yemen. witnesses say yemeni security forces fired shots as demonstrators scaled the walls of the compound. the embassy building appears not to have been preached. also the body of chris stevens and three other americans killed in the consulate attack returning home to u.s. soil. last night the senates passed a resolution honoring the victims. in the meantime, two navy warships are being positioned off libya's coast awaiting orders. president obama telling libya's president last night that the country must help the u.s. keep americans there safe. anti-american demonstrations have spread beyond libya and egypt. we will bring you any developments throughout the morning. and then at 8:35, we'll be talking about stability in the
middle east with senator john mccain. le also our special series on the future of finance continues this morning. today's headliner is former who are began stanley chairman and ceo phil parcel. and r. a phil is cautioning that the comments aren't black and white. he'll explain what he thinks about the controversial topic of breaking up the big banks. of course the fed may be the biggest news of the day. many expecting the central bank to launch that third round of quantitative he quantitative easing. the decision announced at 12:30. and then better bernanke will hold a news conference at 2:15 and we'll have complete
coverage. another central bank already making an announcement, south korea holding interest rates steady. the market had been expecting a cut. u.s. treasury says economic sanctions against iran have slashed crude revenue. washington vowing to keep up the pressure to present the iranian government getting nuclear weapons. in corporate news this morning, we have ford having a board meeting in michigan today. directors expected to discuss ceo succession among other things. president of the america's mark fields seen being promoted to chief operating officer. and that will give them a clear path as a probable choice to take over when alan mulally leaves. alan is 67 years old.
and expected to step down next year. like social security. used to be 65. when it used to be 65, people -- a 65-year-old man isn't what 50 years ago isn't what he is today. >> what's the right age then? >> i don't know. i don't know. i just know that there is guys like rupert, guys that in positions normally not public companies because of the optics of being there staying too listening at a public company, even board memberses sometimes, i remember larry was on all these boards. >> that had mandatory requirements. >> new york stock exchange has help. >> everybody's different. >> you would think you want to hold on to the experience. >> i know people who have lost it in their 50s and people who were as sharp as ever in their 80s. so i think we need to ere-evaluate. if i were a ford shareholder, fields, i like him, but mulally is exceptional. and as a ford shareholder, i
wouldn't want to just -- used to be mandatory 65. i'd at least move that to 70. and i'm not just talking my own book here. it's not just for me. i think we see here every day what age can bring in you terms of wisdom and correct opinions versus someone a lot younger. still trying to assimilate things and not sure where the hell they stand. anyway, major shareholder in aeds promiseses to closely examine any tie up between this airbus maker and british rival bae. a big deal. yesterday bae systems and aeds said they were in talks to merge and that would create an industry leader that would even overtake boeing.
sanofi winning approval for its multiple sclerosis pill. aubagio. sounds like a new casino. that's bellagio. i think they put -- when they come up with new drug names, they kind of just put a bunch of letters together. hopefully it doesn't mean something else like they did with -- >> oh, the nova. >> this which meant stuck in the mud or-will-the drug shown to being less effective, though, than some with milder side effects. analysts say it could find favor among newly diagnosed patients. 35%s to 40% of sufferers say they prefer to take no medication than face some of the unwanted side effects from the
current drug regimen. >> also in headlines, prosecutors investigating the collapse of mf global are close to wrapping up. they are unlikely to file criminal charges. prosecutors met with the former ceo of the failed commodities brokerage jon corzine in the last week, but reportedly gained little new information.end of a criminal probe could pave the way for regulators, though, to bring civil cases. so it's not over at this point. >> but people always asks -- >> why no charges. >> i'm not suggesting there should be, but there is this persist tent question out there. the former goldman sachs effective director publicly resigned last spring, he's written a memoir and it will be published next month. greg smith accused the firm of routinely ripping off clients. goldman said there is no substance to high school his assertions and that book will be out in about a month and of
course lots of questions about should question focus on this, should we not. so -- >> for as much as he looked like blankfein, you would think blankfein would have seen hip and said, you know it this guy looks like me. i'm going to bring him up through the ranks faster. never happened, hoe. mayor blook bufl, sugary drink crackdown will go to it a vote today. i know you can buy two of them, but just can't get it all in one container. a board of health meeting starts at 10:00. this will solve a lot of our problems, really. the proposal would bar sales of sugar heavy drinks in more than 16 ounce cups in restaurants, movie theaters and some other settings. and we've talked to some people that have businesses in new
york. they don't know whether they can do coffee or tea, they don't know what applies, what doesn't. but just nice to see the nanny state alive and well in the biggest city in the country. and i was going to have a muffin day. i didn't check the calories. maybe i just better not. >> your daily egg. >> i have a daily egg in the morning. but since you feel responsible for paying for my health care, just keep an eye on what i'm doing. okay? in case i step out of the guidelines that michelle wants me to eat. >> the peanut butter pretzels on your desk. >> they're just little nuggets. but we have to make sure the studies -- one says one, one says the other. and so we'll have to change these guidelines every time. red meat one day and then the next day you're not. >> mcdonald's is putting calorie
counts on everything. we've gotten used to it in our area. and i have to say, yesterday jan fields was on "squawk on the street" and she said, oh, no, it doesn't change consumers behavior. it changes mine. i see those things up there -- >> i don't know why you need those at mcdonald's considering we thshould just ban mcdonald's. we should just close them down. i know it's a dow component and a valuable company that has operations around the world, but you know they're feeding our children poison. >> been in san francisco recently? >> are you allowed to eat in san francisco? >> they got rid of the happy meals. you can't give toys away. >> well, you can't really be happy there. so why would you want a happy -- no, you can, just the difference -- anyway -- >> let's take a look at the markets. right now we're see things at a stand still ahead of that fed meeting -- or the fed decision after the second day of meetings. at this point the dow is indicated higher only by about 11 1/2 points. subpoena s&p up by less than
half a point. should point out that the dow closed yesterday at another 4 1/2 year high, so the markets have been slowly pushing higher even as we a wait this decision. we'll talk about that through the day. and why don't we take a look at europe. >> it is time of course for the global markets report. kelly evans standing by it in london. >> i want to focus attention on the potential tie up between bae and aeds. you're seeing today shares of both in the red down 6.5% and 8% respectively, but keep in mind for bae, we did see their shares up 11% yesterday when talk of the deal was first reported. this morning, though, there's a lot of concern about how this potentially would play for regulators wrord wide. not just here in europe, but of course the u.s. going to be a focus. we spoke with phil lebeau this morning and iources have been a
waf wear of the talks going on. could put more pressure on the smaller players. definitely means stepped up competition. combined revenue for military sales, 45 bmd last ye$45 billio bigger than lockheed martin. you can see the impact on the broader market. the ibex 35 the underperformer down 1%. other markets are lower, as well. a lot of talk about people just waiting on the federal reserve later today. saw it in asia where central bank on hold including the bank of korea. italy is in the news a little b bit. it auctioned off a 15 year bond for the first time since last year. borrowing costs came down significant loi that.
seen as a relative sign of success for that country. just want to leave you with a quick look at what's happening in the commodities and oil space in particular because of course we have renewed interest in the mideast. don't have that price action to show you, but nevertheless want to reiterate that that's been the major news out this morning and we haven't seen too much of a reaction in oil prices. but there certainly is going to be upwards supply pressure now at the same time that people are talk about fed easing and global growth adding more of a shine to the demand side, a well. back to you. >> apple shares are bouncing around all afternoon yesterday after tim cook unveiled the i phone 5 and several other product upgrades. joining us write an marshall from isi group. anything that you can say that i haven't heard, brian, yesterday with our detailed coverage of the event? >> sure, skrjoe. the actual product came in
similar to what we were expecting, from when i actually tipped the iphone 5 and got to play around with it, i was blown away. i think once you get it in your hand, it will feel much different than the iphone 4s. >> why, what eye differe's diff? >> kind of like the ipad. when you actually touched it for the first time, you were like, wow. and the iphone 5 has a similar feel. it's 20% lighter, almost 20% thinner. but the actual screen is four inches. so on a geometry basis, around 30% laernlg than the current 3.5 inch screen. so at the end of the day, much better product from a feature standpoint. >> my question on this was i have been a blackberry holdout because i can't figure out how to type on the touch screen. if i turn that screen sideways, do i get a bigger keyboard? i can type on the ipad, i can't type on the iphone.
>> the one dimension that is the same is the width. so you can actually type with one thumb. but if you want to go to the landscape mode, that keyboard will expand and i think you'll have a little bit of a better typing experience. >> when i was looking at some of the mail yesterday, i was like, people, it's a phone. but it's really not a phone, is it. it's like a little computer or something. >> yeah, definitely. it's a portable computer. >> whether it allow facebook to become mobile? is it big enough to where i'll do social -- i'm out of my comfort zone here, but am i going to do social things on my phone? >> sure. >> will i never have to actually see an actual person home or and you were? i'd be okay with that but is that how i can socialize from now on? >> with face time, you can actually see them, as well. but the old phone did have tweet
integration, facebook integration. the new iphone 5 will have that within siri. so the voice recognition system. you can say, hey, post this to facebook or tweet this to twitter. and it will do that for you without typing. >> slate says this about the new iphone. if you're happy with your iphone 4s, i see no compelling reason to upgrade. do you buy that? >> i don't. i have the 4s and i was thinking when i was going into the event am i really going to upgrade. and when the specses are coming out, felt the same way. and when i got the phone in pie hands, again, it's kind of the epiphany there. i do need to buy it. >> one other question about their future revenue, this is apple, if you look at how the 4s sold, there was a huge out of the gate sale. but then it tapered off and it tapered off quickly than some of the other phones. when you think about the revenue stream for the iphone 5, how do you think about it? >> that's something that we'll see going forward. since the phone launched originally five years ago, what
we saw is a launch, a peak, and then a slow deceleration. now the first quarter is the peak and then a pretty rapid falloff. i think that will be a trend going forward and i think that's who are indicative of a product cycle driven company. so i think the multiple on apple will be a little bit lower going forward. in addition to the law of large numbers. still one of our top ideas. we went from a neutral to a buy and been bullish ever since. but i think some of the things have to come into consideration. >> real quick because we got to run, just trying to understand one thing. do you expect a year from now that they'll have to upgrade this information in a much more meaningful way, meaning are the replacements going to have to come faster and be bigger? >> i don't think so. the next version will not be a complete rebuild like this. i think the phone 12 months from now will be a better functionality, but not a complete redesign.
i think we'll see that with the iphone 6. >> i'm afraid to get this one. i'm afraid if i get this one, i should be waiting for the iphone 6. i want to make the move when it's thor effect -- >> never going to happen. >> iphone 6 will be better than iphone 5. you can't get -- >> but there will be iphone -- whereby an was going, i think he suspects it will be an iphone 5s next year. >> i bought a tape eight minute abs and within three months, seven minute abs came out and here i am wasting eight minutes to get a wash board stomach. and then -- but then someone proposed six minute abs. you can't get burned with six minutes, can you? >> not any more than you can in eight. >> what's that in your hair? come here. never mind. thank you, brian. >> what's that in your hair?
oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
yes, ma'am any security forces fired shots as demonstrators scaled the walls of the compound. the embassy building appears not to have been preached. no casualties have been reported. joini joining us seen kror associate for the middle east program. thank you very much for being with us this morning. i know you follow all these events in the middle east. to you what stands out is the most important thing we should be thinking about after all this chaos? >> fisrst, the death of am bats
door chris stevens was really stran tragic because he had dedicated his adult life to building bridges between the united states and the arab and muslim world, particularly libya. and i think this is going to sour a lot of americans about the future trajectory of the middle east, about the direction in which the arab spring is headed. and i think particularly this is tragic for syrians. syrians who are now under siege or around 20,000 syrians have been killed by the regime of assad and i think many syrians were hoping for an outside intervention or outside aid to provide some type of save zones. and i think the reality is that after the united states and nato had gone into libya it oust
gadhafi, i think there will be far less appetite to want on do anything in syria. >> probably also raises huge questions about money from america that is going to fund some of these governments particularly in egypt where it's $1.5 billion plus another billion that was being put together in a package right now. how do you think that plays out in congress at this point? >> that's absolutely right. egypt is a country which has i think the second or third largest aid package from the united states and our embassy and cairo was breached. and the current president of egypt, mr. morsi, hasn't really apologized for that. so i think as we're beginning to cut back on our foreign aid budget and i think there's a bipartisan desire to reduce our footprint in the middle east, i think a lot of people are going to be looking at our aid to egypt and wondering whether that's the wisest way to spend our money these days.
>> so obviously this is very difficult to try and handicap at this point, but if we were to cut back on funding, what do you think's happened in some of these countries? >> in an ideal world, what we would do is offer less aid in terms of military packages and focus more on aid packages trying to strengthen civil society, trying to strengthen kind of more moderate tolerant forces. but the reality is that when popular uprisings take place, revolutions happen, historically what oftentimes tends to happen is that they begin as popularly based uprisings, but eventually the most extremement wi element rise to the top. and that is true of the middle
east. moderates in the middle east -- or extremists in the middle east go all the way and moderates just go away. >> so is there a message or any sort of silver lining that you can find in any of this? or does this look like just that bleak of a situation? >> i think if there's one silver lining i can position of, it would seem to me he that there is probably less of a likely hood for some type of a military attack on iran now. whether by the united states or israel. i'm certain that president obama, his immediate priorities are to try to get reelected, to try to make sure that the american economy is moving forward. he doesn't want to get involved in another war in the middle east and i'm sure he's froebling prime minister netanyahu that the last thing he needs on his plate right now at a time when there's great tumult in egypt
and yemen now is for prime minister netanyahu to launch a war on iran. >> thank you very much for joining us this morning. >> thank you. when we come back, he's been making headlines and breaking news in washington since the nixon administration. now bob woodward's latest book goes inside the handling of the debt crisis. he'll join us live next. first as we head to a break, house majority leader eric cantor asked about the book earlier this week on cnbc. >> we don't think increasing taxes especially in an economy like this helps job creation, that somehow it helps our economy and the confidence level. we never differed on that point at all and it was the president who continued to insist that the only way to go forward was to raise taxes. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people
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welcome back to "squawk box." i'm joe kernen along with becky quick and andrew ross sore kip. today's top global market stories, many forecasters expect the central bank to go ahead and do it, launch a third round of quantitative easing. signal that a weak economy may warrant ultra low interest rates for at least another three years. but this is anything but certain. the fmoc will announce its decision at 12:30 eastern. the chairman bernanke will hold a news conference at 2:15 eastern. we will have complete coverage right here on cnbc. allied financial is the old g
mac. >> on life support. >> so their latest commercial has this leading economist sitting there and someone says you can tell me where cd rates will be in two years and he just gives one answer, he says no. and i guess they want to give issue kind of floating -- i don't know what they're trying to sell. but normally that would be the answer. but given what the fed -- you almost can say. >> it would be at the same level. >> the one thing that's staggering, you do polls, what would polls of economists say on the efficacy of another round of qe? and seeing what the efficacy is and knowing that there is some worry about -- >> he did yesterday. 60% of them don't think it will work. scl basically everyone says that. that rates are so close that that's n low that that's not theder how market expecting.
>> don't you think the traders are waiting for sugar? i think it's methadone. i think they'red a digt ed addi worse. >> should we go to bob woodward? >> he's not studio? >> he's in washington. just how contentious were debt ceiling negotiations between the white house and congress. according to a new book, would you say than anyone could have ever imagined. joining us thousand with an inside look, bob woodward, and you sthor a authoriuthor of his. it's a great account. at the end of the day, take us inside the room. who do you ultimately blame for the debt ceiling collapse? >> well, as you know, the book is not just about the debt
ceiling. it's about obama and the congress and what they did the last 3 1/2 years to try to fix and manage the economy. in the end, the president is at the top and bears the most responsibility. at the same time, as i show the republicans are kind of a brick wall, quite inflexible on the issue of taxes to say the least. but all of these things turn on moments and there are moments in the white house when they more or less impulsively decide they're going to ask the republicans particularly speaker boehner for more revenue $400 billion in -- >> you leave some wiggle room there, bob, about whether -- the president says he was injurijus saying if we could get another 400, it would be nice, but i'm
not zing. where boehner said he came back and wanted that. is there a gray area there, do you know whether -- >> there's more than a gray area. >> we hear pelosi and the house read the president the riot act and that's when he came back and said we need another 400. did it happen that way is th? >> the way it happened and i lay it out almost hour by hour, the gang of six senators said we can do a plan and deficit reduction plan with at least $400 billion more. in the white house david plouffe, the political adviser, the person who has the office close he is to the oval office, somebody who had been obama's campaign manager in 2008, says wait a minute, this is a watershed moment because among those six senators are three
republicans asking for more revenue than the president is. so the president decides and the congressional liaison chief says to the president, look, if you don't ask sask for more revenue you'll be part of the weakest presidency in the history of man kind. as a challenge, we have to do this. the president picks up the phone and calls boehner and talks about $400 billion more in revenue or some change in the entitlement plan in the deal they were working on. when you go through this and report on it, you ask the question why do this on the phone. one of the most important conversations the president is going to have in his term. and as i recall, it's not far from the capitol to the white
house. have the speaker come down, bring his staff, bring the president's staff in there so there's no confusion about what's being offered. >> what i can't tell from this, it sounds to me like neither side, though, had enough votes. so why did they think they could? >> very good question. and i laid this out and asked both speaker bay foehner and th president about it and their essential conclusion is that if they agreed as the leaders and went before the micro phones and cameras and said we have on do this for the country to stage l stabilize the debt situation for the federal government which as you all know so well impacts everything in the economy and the value in the end of people's hom homes, bank accounts, anything that might have a value, that the momentum and the authority of those two could have forced
people to go along with something they necessarily would not agree with and the theory was it's mutual pain, that it's a compromise. like withdraws made in the ray beg reagan era and clinton era. >> that's a big question we have before the election. and when i hear you say the president was serious about this, it makes me think could he try being try angulate? could take a page out of the clinton book? the far right says there's no way. there are a lot of things that his base didn't like and what he was agreeing to do with boehner. >> that's right, but there was a vagueness to all of this. and if you look at the offers, it will numb your mind and there
are lots of numbers there and so forth. but it wasn't clear exactly what the details would be. but if you adopt the theory of the case let's do something that's mutually painful and as you know, this -- we are going back in the soup on this in a couple months with the bush tax cuts and the forced spending cuts. and so this is not a story of the past, this is a story of the future. and in the book, this treasury secretary tim geithner's kind of running around with his hair on fire saying do you realize if we default, the impact of this. it could be worse than the 1930s depression. certainly worse in what you wrote about in the 2008
financial crisis. so we've taken the country and we are now at this moment of real economic peril. how do you fix it. you can't run an economy on the razor blade where you ever the federal government with what is it now, $16 trillion in debt out there in the world market. people are going to start -- it's stable now. it's respected. it's really the pillar in the global financial world. but if you change that, if you undermine it in any way, interest rates could sky rocket and thetory books. >> the solution a lot of people had assumed would come from the senate, but as you layout, it's the gang of six that really busted up these negotiations
last it time around. where do you think an answer will arrive from? >> maybe necessity. maybe the realization you can't -- we now have a federal government that is really on a spending binge. it's almost like an addiction. the government is spending a trillion dollars a year more than they have, so they're borrowing that again in the world debt market. you are going to have at some point a debt crisis. so you have to get control of this. what's interesting is the politics drives it and no one has come up with any solution. and this is one of those times where when it happens, it should not be a surprise.
but a lot of people will say, oh, i am surprised. >> you've covered so many things over the years and you've written about bush, all these other -- you saw the comments from romney yesterday and the big hoopla, the back and forth on this very unfortunate and tragic event. i'm seeing on certain websites they're replaying things from 2008 where then candidate obama weighed in, we lost nine service men in afghanistan and he questioned the mideast policy of president bush and candidate mccain. when you were watching it yesterday, was that that unusual for a candidate to weigh in on foreign policy at that point? >> no, but it's tricky. and sometimes you need to hold your fire. and romney i think is getting blasted an cross the political spectrum for this. and just let it go for a while. particularly when americans are killed in a violent act.
you need to press the pause button. and he seemed to have run into the machine guns on this. but i haven't done any original reporting. it's a task, it's a moment, it's the daily food fight. >> exactly. >> and the daily food fight sometimes lastst a couple of days or longer. but there's these underlying fundamental issue, foreign policy, what are we really going to on do about iran. and what are we going to do about the economic cliff that we're now living on. >> bob, real quick, do you have anymore confidence that whoever is the president for the next four years, that washington will become any less divisive than it is now? >> well, it's about leadership. and i talk a little about this in the book. that reagan, clinton, you you
certainly can criticize them for lots that they did, but in the end on the important matters of national business, they insisted that they do things to stabilize the economy. as you know, the in-coherence in the tax and spending policy and exactly what's going on with all of this is destabilizing the financial markets and the heads of people trying to invest and see the future. >> well, i know carl -- i don't think he's gotten over that you got redford and he got dustin hoffman. you're better than looking than red ford. >> you have no idea how many women i've disappointed. >> well, you though what, that will be our sound bite that we take from this. i don't think you've ever acknowledged that. thanks, bob. >> no, i've acknowledged that. >> bob woodward, thank you.
the book the price of politics. we appreciate you being with us. next time we'd love to have you on the program back in new york of course. we have to give him a squawk book award. >> we should. >> if you have any comments or questions about anything we've been talking about here, e-mail us at email@example.com and make sure you bring something sweet to the office this morning. it is international chocolate day. of course if white chocolate is more your speed, you'll have to wait until the 22nd. that is the day the national confectioners association has named in observance of that sweet. and in the next hour, we'll find out why phil purcell says breaking up isn't hard to do for big banks. plus what he blames for the financial crisis. here's the opinion of former wells fargo box on "squawk box" yesterday. >> this crisis was caused by
about eight investment banks and 12 savings and loans. period. so 20 financial institutions caused this crisis. ls in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this.
check out these live pictures coming into the newsroom. this is cairo and you can see the protesters standing outside the american embassy. this is spreading through other areas in the middle east including tunisia, as well. earlier today protesters storming the u.s. embassy in yemen. security forces fired shots. the embassy building at least in yemen appears not to have been preached. again these are live pictures of
those protests continuing outside the u.s. embassy in cairo. we will continue with live coverage throughout the morning. so stay tuned. we're sitting on a bunch of shale gas. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪
oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. nave 50% on banners.
the iphone 5 is faster, lighter, thinner, 70% of apple's gross revenue. >> what can they come up with next? 2013 i think will be the year of the ipad. >> apple is going to cannibalize its own phone. >> a source of mine close to apple central have multiple announcements before the end of the year. >> the biggest stories in business on cnbc. joining us onset is -- ♪ >> helena morris see from newton
investment management. oversees $76 million in asset management. >> your daughter is a songwriter? >> yes, i suppose so. >> that's enough for us. >> helena, thanks for coming back in. great to see you. >> pleasure. >> since we last spoke with you, quite a bit of progress in europe in terms of trying to figure out how to deal with this massive problem. the german courts went ahead and signed off on this. draghi has this big plan. >> last time we talked about whether it was too little, too late. they have had some success over the little while showing more leadership, showing there is a possibility of more fiscal burden sharing. that's what the ecb's latest report is saying, they would stand as a back stop for the weaker countries. we've got a lot of work to do and it's going to be very painful, still, countries like spain are the ones to watch
where you are seeing social unrest. tragedy on the human scale that's amazing in terms of the unemployment rate. i think there's a long way to go. in the meantime the financial markets are better. things are improving. >> do you think that we will continue to think that these games are so great? we look at it from our perspective and it seemed like it was moving at such an iceberg-type of pace on all these changes. there are still not serious solutions to all these things. the austerity is going to be preting damning if it's put back on these people again. is this a momentary lull or pause or is there light at the end of the tunnel? >> so far they're treating the symptoms, not the causes. there's talk more of a plan, a federation and so forth. ultimately the eurozone, as i described last time, is built as a flawed concept with monetary union and not having political union. that's a big, big step away. so far it's just still dancing
on egg shells around those very difficult loss of sovereignty and the human sacrifices to get there. >> as someone who is managing a lot of money, $76 billion, how do you look at all the things happening there and try to figure out where to put your money? >> we have this theme attic approach to investing. it's not an excuse for not keeping up with events. it's just saying let's have roadmap to start with. deleveraging which is obviously what's behind all the working through of things in europe is a big theme for us, and it has made us quite cautious of the banks in europe, and we're prepared to sit out, brief rallies where there's still a long way to go before we can be confident that the future is more secure. >> so if you don't like those areas, what do you like when you look at some of these things? >> a lot of europe's problems are about adjusting the the fact that we have this global realignment of economic power and seeing a lot in the emerging economies as people are now calling them, perhaps overtaking
some of the more developed markets. we've seen a lot in asia, a lot of beneficiaries also companiwise, sectorwise. i talked before about the health care sector. we are able to play and invest in areas where people will continue to consume, even if the economies aren't great? >> helena, we want to thank you for coming in. we hope to see you again soon. >> thanks, becky. anti-american protesting breaking out in multiple parts of the middle east. what this all means for everything from the presidential election to the global market. stay tuned. ♪
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to read and consider carefully before investing. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again.
finance. former ceo phil purcell joins us. get his thoughts on banks, wall street regulation and the key of shareholders value. the violence at home and the political fallout. >> i think president obama demonstrated a lack of clarity as to a lack of policy. >> governor romney has a tendency to shoot first and aim late sgler the intense debate on how america should lead. the secret to apple's success. >> this is iphone 5. >> how ceo tim cook is keeping steve jobs' magic alive. the second hour of "squawk box" starts right now. good morning and welcome to "squawk box." i'm andrew ross sorkin along with becky quick and joe kernen. looks like the cow will open 13
points higher, s&p higher, nasdaq off marginally on the other -- in the other direction. >> it has been amazing to see the market continue to climb even though it's awaiting the news from the federal reserve. it is a big decision day for the federal reserve. yesterday we closed at a 4 1/2 year high. steve leisman made the trip to washington for the news conference later today. steve, i guess the question is, will he or won't he? >> i mean the expectation is that he will, and he will do so into what is essentially a very charged political environment. i want to sort of walk you through what seems to be the decision-making process of the fed chairman here. let's begin with the minutes of the august meeting which essentially gave us a litmus test for whether or not at this meeting -- maybe some other meeting soon, but it certainly was taken by the market whether or not they would act. here is what it said. many members judged that additional monetary accommodation would likely be
warranted fairly soon unless income information pointed to a, wait for it, here it is, substantial and sustainable strengthens in the pace of the economic recovery. so now let's take a look at the data. the data showed that the payroll averages including the revisions over the past two months have been $118,000. the unemployment rate ticked down by 0.1%. retail sales lackluster, business investment really down on the average. residential construction has been one of the bright spots with a down month and then an up month that did away with it. what are the expectations of the market. you would think they would be predictable. those expecting qe 3, we showed you yesterday, 90%, those expecting qe 3 in september, 77%. remember the fairly soon line from the minutes. and then those who say qe 3 would actually lower the unemployment rate, 36%.
of course, the o help the econo. among them, the fed chairman. that may be what matters most. becky? >> leisman, a couple things, did qe2 work? >> i think it helped. you can see some increase in the stock market. >> but the consensus is qe1 helped, qe2, they're not sure. >> a little less. >> a lot of people say there's no reason to do this. you have the dual mandate. that's what these guys are thinking. whatnot. >> did you read george will this morning in "the washington post"? >> we don't get "the washington post" here. don't they have newspapers online? >> they're online, yeah. >> you need a subscription. >> if you had an ipad, you can get it that way, too. >> let me mail it to you. give me your address. >> it's the hair@cnbc -- no.
you mentioned one other thing. you mentioned the participation rate helped. have you gone back to the peak in unemployment -- >> i've seen that work, yeah. >> what is it? if you held the participation rate steady. >> i see stuff like 11%. >> where we are right now if people had not left the workforce, we would be at 11%. >> right. the question is who do you not count. some of them would lead and some would be discouraged. what i wanted to say about george will is he went to talk to esther george of kansas city, richard fisher who i think we'll talk to next week from dallas. he talked to jim buller, basically said the central bank out there centrally planning, basically saying that the -- venturing into fiscal policy. i don't think what george will says is so important by itself. i think it's emblem mattic, if the fed acts today, i think the
fed is going to become a major political issue in this campaign. >> it's not just that. congressman scott garrett is expected to speak later today and say the same thing, he's going to say they've gotten into this area of fiscal planning and that they shouldn't be doing that. of course, you can point back to congress and say they're doing it. >> my expectation, becky, it will move from our little world where we talk about should they or shouldn't they into the bigger world. if guys like george will are writing about it, and it's become a whole different conversation from what it is now. >> don't you tend to discount just about anything a person that just insists on wear ag bow tie says, just in general? >> joe, that's not a bad rule. that's not a bad rule of life. >> think of the people that have come on this network, over history, that have insisted on wearing bow ties. >> there's jim grant who you like. >> yeah, but he says things that are a little bit -- is that what my hair says?
>> i don't think you're agreeing with your hair today. >> my hair is saying you have no idea what you're saying. >> that's not what you're saying. >> it's a good rule to live by. >> a lot of quick decisions in this world. if you can discount a whole bunch of people real farce, it would be helpful. >> the people who insist on wearing a y? what's the whole rationale behind that? >> what about guys with like 12-year-old haircuts? is that something you can discount. >> that's pretty funny, that i think you're alluding to me right now. this is a damn good haircut i have right now. >> i don't know. i've seen better. for ten years i've watched you. >> you got too much off on the sides. >> now you can insult me. >> not insulting you or the mud puppies. thank you. >> we will hear more from steve later this morning. by the way, be sure to tune in at 12:15 eastern. that's when we find out if the fed will initiative another round of this quantitative easing. brian sullivan is going to be
joined by pimco's bill gross, bark clay's barry nap, invest co-'s ron sloan and steve leisman, the man himself. all will have instant analysis on this plus stock and bond reaction from rick santelli right here on cnbc. at 2:15 you the hear fed chairman ben bernanke, holding the news conference to explain the fed's latest news. we'll have that entire conference at 2:00 p.m. eastern. latest reports say there were no casualties as protesters stormed the u.s. embassy in yemen. that's according to yemen's embassy in washington. witnesses say yemeni security forces fired shots as demonstrators who scaled the wall of the compound in the yemeni -- our embassy there. the embassy says order has since been restored. the bodies of ambassador chris stevens and three other americans killed in the benghazi
consulate attack returning home to u.s. soil. last night the senate pass add resolution honoring the victims calling their deaths unacceptable and unjust find. meanwhile two navy warships are being positioned off libya's coast. president obama telling libya's president that the country must help the u.s. keep americans there safe. anti-american demonstrators have spread to tunisia and gaza. we will be joined by nbc's intrepid richard engel from cairo in a couple minutes. at 8:35 eastern we eel talk about stability in the middle east with senator john mccain who was close with ambassador chris stevens. apple shares bouncing around after ceo tim cook unveiled the iphone 5. thinner, lighter, features a bigger screen and made entirely of glass and aluminum. in the last hour of squawk, we spoke to brian marshal of isi group and asked him about the user experience.
>> the actual product came in very similar to what we're expecting. when i touched the iphone 5, had it in my hands and got to play around with it, i was blown away. once you get it in your hands you'll feel much different than your iphone 4s and that will drive a lot of upgrade. after a volatile day the stock riding in pre market trading. at 7:40 eastern we'll hear from jay elliot, the author of "the steve jobs way: i leadership for a new generation". when we come back, phil purcell will join us for the remainder of the show as our guest host. that plus much more on the markets and what's going on in the middle east when we return.
it is faster, lighter, thinner, it is 70% of apple's gross revenue. >> what can they come up with next? >> 2013 i think will be the year of the ipad. >> you say apple is going to cannibalize its own product. >> no big dramatic bump up. 1%, some were expecting more. >> a source of mine close to apple said multiple
financial advisors and retail brokers. yes, i would have stayed on the phone and given you a small account, very small, very small. >> well, that's fine. give me 10% of your trust. let me earn the other 90%? can i call you today or tomorrow. >> you were trained very well. >> your wife? what have you got to talk to her for? who wears the pants in this family? every excuse. phil, one thing just to bring it back to retail business. i remember in 1981, after we had been through a really bad period and there were no broker-of-the-day calls. no one wanted to talk equities. everyone still investing in real estate. i wonder if today we look at the amount of interest in retail and we see it every day here. we're in a similar period even though the market is at -- almost at a high. we spent 12 years trading wide. >> the retail clients today feel
very much like they did in '81. and everything is going in to fixed income. we've got billion dollar flows, mutual funds into fixed income. $500 billion out of equities last year and this year by the end of the year. they don't want anything to do with equities or risk assets, and then if you want to think about '81, you better think about '82. august 17th of '82. >> off to the races. >> everything took off and we had a -- basically an 18-year -- >> we did have a president named reagan come in at that point. >> we had a lot of good things happen. >> released the hostages the day he was inaugurated. so bizarre. i remember the broker's mantra, please let there be another bull market because i spent all the money i made in the last one. they've been praying for 12 years. some day -- will it happen do
you think? >> absolutely it will happen. >> we went from 780 to 14,000. that would take us to 100,000. >> i don't think that will happen. we will have another bull equity market. i'm the other way. what i worry about today in terms of the markets is the fixed income market. to me the fixed income market feels like 1999 equity market. that is people think we're going to have 1.5% ten-year bond forever. >> the fed is expected to stay probably through the end of 2015. right now they're saying the end of 2014. today we're thinking they'll extend it for another year. >> yes. everybody is discounting that and counting on it. usually the market doesn't accommodate you. every time you get a total consensus and everyone is in agreement, at least while i've been watching markets, the market doesn't accommodate you. something happens and it changes. >> would it be an improving
economy so the fed can take off that promise? >> i would love for that to be the catalyst, okay? i think if you ended up with stable tax policy where people could count on taxes in a stable regulatory environment where people really knew what they were going to be competing in, i think we'd have a good economy. this economy is -- it's still very resilient. we still have more innovation than anybody else. technology driving it. we'll be all right. >> i tell you where i am. i don't want to give up hope, but i kept going back to the way i felt in 1979 or 1980, and i never thought i could buy a house and we had 21% interest rates and inflation was 14%, unemployment was 11. we were hopeless. when you're in that period, it's hard to believe you ever come out of it. with all the problems we have here and now, it's a global world where people are ready to eat our lunch around the world.
i feel the same way now. i'm not sure we do come out of it at this time. you think we'll be okay? it's morning in america. >> i don't know when it's going to happen. >> we've got no manufacturing -- if you don't create some stupid social thing i don't understand on the web, there's not even a way to be a entrepreneur anymore. is there? >> i disagree with that. i think that there is. >> i'm playing devil's advocate a little. we'll see. do you remember any period where you felt more disconsulate than this? >> '72-'73. >> that was bad. i was in high school. >> i've seen more bad times. '81 was very, very difficult. '80, '81 was difficult. there were periods, '87 with the market crash for a couple days we thought the world had ended. >> is wall street ready to participate in the next boom? there's no firms left, are there?
>> sure there are. >> you want to break up the firms that are left or don't want to break them up? >> no. i don't want to break them up. i'm waiting for an opportunity to contradict the introduction. >> there you go. >> i'd go the other way in terms of is wall street ready. from 2007 to today, the banks have doubled their equity, measured by the fdic. they are immensely stronger than they were. not only did they double their equity, they have reduced leverage. so they have enormous capacity to lend money if businesses want to borrow it. so i think that they could be a big part of the catalyst to get the economy going. but they can't do it themselves. they can't force people to borrow money. the businesses have to decide if they want to do it. >> you made an argument, a compelling argument in the "wall street journal," early december, suggesting that the banks should
break up because they'd therefore become more profitable. they'd be spun off the units independently. that was actually a better business model. no? did i misread it? >> you didn't misread it. the argument i tried to make and maybe i didn't make it well, is you've got tremendous differences in how banks or financial firms are valued today. if you look at a u.s. bank or a wells fargo, they're valued at 1.5 times book. if you look at the banks that have big investment banks and trading operations, you know, the bank of america, citi, pick one, they're valued at half to 60% of book. to me the shareholders, the g i guy getting cheated. the banks trading at half a book, they should consider spinning off some of the businesses that you know would sell at 1.5, 2.5, three times
book. i'm advocating considering tax-free spinoffs if the shareholders are not being rewarded. used as an example, morgan stanley spun off discover card in 2007. discover card at the time was 17% of the value of morgan stanley. if you held on to your morgan stanley shares and discover card shares from then to now, discover card is worth quite bait more, 20, 25% more. that's tremendous shareholder value. if you look today at citi, they've got a credit card company three times as big as discover no matter how you look at it. if it was spun off, it would be $60 billion, if it traded the sa same as discover. citi only sells for $97 billion.
so i just -- shareholders got punished -- shareholders of financial firms got punished big time 2008, 2009. a lot of them haven't come back. citi is still 90% down. b of a, 80%, 90% down. so my argument is those managements, those boards of directors, ought to get more shareholder oriented, they ought to be willing to do things that aren't comfortable and they ought to deliver -- >> but if they think this big super market approach is the right way and they think the market will eventually come around and reward them for that, if they say we're trying to be patient waiting until the market comes around to them, what would you say to them? >> i would say your shareholders have been patient for four years. >> enough is enough. >> there ought to be a shot clock. at some point you have to say we're willing to consider things we're uncomfortable with in the
environment of all the synergies is different today than ten years ago. >> we'll talk more. we've got to take -- just to cover my butt, what do you think of the new iphone 5? >> i don't have one. >> any comments at all? think it's as good as the -- >> anyway, we'll have time to talk about that later, and facebook. >> a lot to talk to phil about. in the meantime, when we return, libya violence getting political. we'll hear from both sides of the aisle and the question of the morning, can tim cook make apple his own and keep the company growing in what he's called the post pc era. we'll speak to former apple employee who is steve jobs' top lieutenant. squawk is back after the break. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim.
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protesters are storming the u.s. embassy in yemen. witnesses say yemeni security forces fired shots as demonstrators scaled the wall of the compound. protests in the middle east continue over a controversial film. cnbc's richard engel joins us from outside the u.s. embassy in cairo. thanks for joining us. what can you tell us? >> reporter: good morning.
i'm out now standing over tahrir square. in that far corner is a -- you can see an empty street. at the end of that street is the u.s. embassy there. the reason it's partly empty is egyptian security forces have been firing, and i suspect as we talk that you will see teargas coming from egyptian security forces, riot police, being fired out from in front of the u.s. embassy towards crowds of demonstrators who have been throwing the teargas back onto the embassy, throwing stones. this has been going on here for at least the last 12 hours. more demonstrations like this are expected to be even bigger tomorrow. today, however, a few country became involved with, as you mentioned, knows demonstrations taking place, violent clashes taking place in front and even inside the u.s. embassy in sana'a, yemen. that's a difficult development
because the yemeni government doesn't even have control over the capital, let alone all of yemen. >> richard, you were there all along the way with the arab spring. maybe we didn't fire it quite as closely for the past six months or so. do we call this a real inflection point here? do we need a new moniker? what is it? the arab chill? what is this? >> reporter: i think the arab spring is dead. in this square you saw student demonstrators calling for an end to dictatorship, to mubarak's rule. the united states supported them, the united states intervened so the egyptian military wouldn't crush the demonstrators. now you're seeing an anti-american demonstration here, a small one, but still an anti-american one. tunisia, the same thing, there was already a small
anti-american demonstration. in yemen, the united states played a key role to try to negotiate a settlement to help demonstrators there. now we're seeing anti-american assaults on the u.s. embassy. i'm not sure if it's an inflection point, but we're seeing a change in mood. the u.s. removed these leaders or assisted in the removal of these leaders and unleashed people who wanted democracy, but also unleashed a real deep pool of anti-americanism, anti-israeli sentiment, anti-zionism that's coming out now. >> richard, we knew at the very beginning this could be the eventual path for some of this. is it too soon to say it was a mistake to support the arab spring? >> reporter: that's -- it's probably still too soon to know that. it's hard to say that people in the middle east or anywhere don't deserve their rights but
at the same time it was probably fool hearty to say that maintaining stability in the middle east, a region as sensitive as this was not a good thing. this region needs a lot of education. the people here were deliberately miseducated, undereducated by their leaders, taught and spoon fed conspiracy theories against israel and the united states, that the united states is against islam. as soon as the leaders who were strongmen who were removed, a lot of those conspiracy theories rose to the surface. i think education is certainly necessary. >> we had one of our reporters earlier, richard, make the point that moderate middle easterners can't compete when push comes to shove with extremists, the best
of intentions -- by definition, when you're moderate, you're not willing to go that extra mile. i guess we shouldn't be surprised. it's hard to anticipate and hard to deal with. >> i think there was also an over estimation of the strength of the moderates. everyone at least in the west was looking at twitter and there seemed to be a flood of moderate voices from the middle east. a lot of the voices were people who lived in canada, australia and the united states, not really here so much. i think that props overrepresented the number of moderates, the number of people who seemed to want just what the united states wanted. that really was never the case. you can see now all the clouds of teargas. that's very close behind that mosque to where the u.s. embassy is. at least right now the egyptian government is acting. when the protests here began and demonstrators climbed over the
embassy walls, it took a long time for this new egyptian government to do anything at all. so this, if anything, should be comforting to the united states which has been asking for more action to be taken to protect the embassy compound and the diplomats inside. >> it's not about this film. these are simmering feelings. >> reporter: of course it's not about this film. >> they've been going on for a while. you get the feeling that this is the beginning of something, this is a tinder box, or is this going to come and go quickly? >> reporter: i think people are always going to be unpleasantly surprised when they peel back the middle east, a region that -- i think because it was ruled by dictatorship for decades, the dictators used education, deliberately kept people ignorant, fed them conspiracy theories, fed them a 1984 world view of everything -- the world is against you.
and when you remove these dictators, inevitably that mentality is going to come to the surface. i think we should not be surprised that there's going to be a lot of anti-american im, anti-israel sechbtment. that's going to be the real big one. this was almost nothing. this was triggered by a film that touched on people's sentiments, insulted the prophet muhammad. this is going to probably die down over the next few days unless something dramatically changes. but if there's a major confrontation over gaza, over israel, even over iran which will inevitably involve israel, then i think we'll see a tremendous division, and we're going to see how really differently people in this part of the world view themselves and view the region compared to the way the united states views it and the way perhaps the united states thought the people in this region really viewed it. >> and it happened the same week that we weren't -- we hadn't fully digested the
netanyahu-obama administration development. when this happened -- if that goes sour -- >> i think i lost the -- >> we lost richard. we do appreciate his reporting as we always do. when we need to go somewhere, he's tlaulz. >> he's the man. let's get you caught up on business headlines this morning. we have a very busy day. the federal reserve policymakers have a busy day ahead of them sells. the fed's latest rate decision and policy statement comes at 12:30 eastern. at 2:00 p.m. eastern the fed will issue the latest economic forecast for the fomc members. at 2:15 chairman ben bernanke will hold the important news conference. realtytrac said just under 100,000 homes entered the foreclosure process. that's down 13% from a year ago. in judicial states like new york and florida, the court must
approve any foreclosures. tie beverage which is offering 7.2 billion for the rest. the offer, $4.5 billion for control of the company. heineken says it's studying the latest developments. up next, the president and mitt romney responding to the situation in the middle east. we will hear from both sides of the aisle. with the president election now less than two months away.
let's continue our conversation with phil mur sell, president of continental investors. i wanted your view on morgan stanley today. in many ways the morgan stanley of today is starting to look oddly a bit like the phil purcell version of morgan stanley. >> i haven't stayed involved at all with morgan stanley. i've enjoyed my freedom in retirement. >> i say that in regard with being back with smith barney and the move towards having a big retail presence which is what
dean witter was to some. >> yes, it was. while i'm not involved, i think that the actions that have been taken at morgan stanley recently are very positive for the shareholders. it hasn't been reflected in the price yet. >> you still own morgan stanley stock? >> i own some, not nearly as much as i used to. as morgan stanley leveraged up after i left and started to taking more risk, i decided i would take less risk and sell most of my shares which i did. but the direction the firm is going today in my opinion is the right direction. it's a difficult market. it's hard for everybody, not just morgan stanley. you guys follow all the investment banks. you know it's not easy today. less deals. europe is very hard at the same time i think what they did with the smith barney acquisition, it
should be a rye turn rent. i applaud what they're doing. >> sound like you like james foreman. how would you ultimately judge john mack who took over the role after a very contentious ending? >> it's not my job to judge john mack. i don't think it's anybody's job to judge a ceo. to me the market judges ceos. you look at stock price and that's what you're trying to do, create shareholder value. to me the way to judge a ceo is look at the stock price while they're there, look at it two years after it. what you do lingers. you can't change things that fast. that's the market's judgment. that's what you're supposed to do. >> do you think we near a cyclical or secular decline when it comes to banking? when you hear people like james gorman or jamie dimon say this
is cyclical, do you buy that? >> i do. i've been through enough cycles. everybody thinks they're going to go forever, whether going up or going down, and they never do. they always cycle. unless you're predicting that the global economy is going to continually decrease, then banks, whether they are investment banks, commercial banks, they're a very important part of the economy. they will rise up and perform for the good economy. >> even with all the new regulations that are trying to take risk out of the system which makes it, therefore, harder to make a big profit? >> i think the thing ma makes harder is having the good economy. the problem isn't that it increases your cost. the problem is that it pervades the economy and makes it much more difficult for the economy to grow. these institutions are economy dependent.
>> but are you saying the regulations themselves against the banks are preventing the economy from recovering as quickly? >> no, i'm not saying that. i'm saying the -- first, some of the bank regulation has been really good. i talked earlier about what's happened to the balance sheet of our banks and our financial institutions. the regulators got right after the fact that we were undercapitalized. they made everybody reduce rev laj, made everybody raise capital. all that is very positive for banks and positive long-term for the economy. so it isn't like everything regulators or the legislatures have done is wrong. they corrected some things that the institutions did wrong, and that's positive. to me the things that are inhibiting the economy are much bigger than the regulations of banks and financial institutions. it's tax policy. it's regulatory policy. it's confidence in the direction of the country.
you guys talk about the fiscal cliff all the time. that's crazy. how do you do business when you don't have any idea what's going to happen in january? >> it takes your mind off of europe imploding and china. other than that, things are going swimmingly. >> as long as all those things are out there, it's going to be a little harder -- >> we have people that are shocked the market goes up. how can it go up with all this bad news? it's almost like it climbs the wall of worry? anybody ever come up with that? >> you learned that in '82. >> right. i thought i just came up with that. maybe not. we'll slip in a quick break. >> when we come back, we'll be talking about the president and mitt romney responding to the situation in the middle east. we'll hear from both sides of the aisle as tensions rise. this is a live shot in cairo. that's where protests are again under way today. we'll talk presidential election and the situation in the middle east. squawk will be right back. needs
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a lot of people waiting to see what the sfed does. at 12:15 we'll get word on whether or not they're ex-tending quantitative easing. at 2:00 you'll see coverage beginning of the chairman's press conference following up with all that. in the meantime, also watching more violence in the middle east with protesters storming the u.s. embassy in yemen. the country's embassy says no casualties were reported yet. a hot button issue for presidential campaigns. mitt romney is saying the first response in attack to american diplomats was to sympathize with those who killed them. the president shot back last night. >> governor romney seems to have a tendency to shoot first and aim later. as president, one of the things i've learned is you can't do that, that it's important for you to make sure that the statements that you make are backed up by the facts and that you've thought through the ramifications before you make
them. >> juliana glover is a republican strategist and founding partner of the ashcroft group. matt miller is a columnist for "the washington post" and a former clinton white house aide. welcome to both of you. >> sitting very close together. is this going to be okay. >> it will be okay. >> we will not come to blows. >> this is a pretty tricky situation. i've watched all kinds of coverage about what happened, when, how you go through all this. matt, why don't you go ahead and play off the president's remarks coming out of this? >> i think romney was trying to inject himself into the issue to try and get something to happen, to shake up what seemed to be a bad trajectory in the polls and i think it looked very unpresidential. i think the -- the reason i think he hurt himself as a lot of republican analysts also said yesterday, his strong point has been if you're worried about the economy and you're anxious, he looks like a plausible alternative.
he's a credible man. when you see somebody trying too hard to inject themselves at a moment when american diplomats and people are dead, it just feels off. i think it's jarring and it's diminishing. >> matt, was that the first time you ever said he was a plausible candidate in terms of fixing the economy, to be able to say -- >> no, no. >> are you sure? >> no, not at all. he's a very credible individual. there's no question. >> you're going to regret that. we're going to keep that on a sound bite. >> just being honest. >> juliana, if you take a look at what's played out, there was the question of when, what was said and what happened. if you were advising, how would you have written the playbook on this? >> first off, there is some discomfort talking about this now. if you're an american walking the streets in cairo, it's a dangerous place to be. the statement released by the state department before the
egyptian embassy walls were breached didn't read-rite. there was something clearly wrong with that. anybody who wlookd at that who had any familiarity with state department remarks or statements on behalf of america in defense of their sovereign territory and our beliefs and values, to be able to say something in effect to hurt people's feelings and to take that a step farther, and then once the romney campaign read that, their immediate response is outrage. i mean, this is ridiculous. >> the administration disv disavowed the same statement. >> exactly. the statement was over come by events when we learned the ambassador was killed. what is really at issue here is what's going on with the state department that they've got some rogue twitter operator in egypt who clearly we now know the state department told him not to move forward with this statement. he went ahead and did so. afterwards he continued to tweet
about it. this is american speaking in the midst of a crisis in country. further, let's look today at this situation in yemen. it's really frightening. why are there no marine brigades outside that embassy? why are we continuing to put these people in harm's way? >> i think the more troubling issue, it's hard to know on the ground what embassy personnel in cairo who are probably afraid are trying to do to manage the situation. the real question is, the romney situation didn't look at that and say we're outraged. they said how can we make a political opportunity out of it? it's poor judgment. >> i don't agree that that's how they viewed this. >> come on? when the romney campaign plain, stewart -- how do we get into this news cycle and inject ourselves in a way that draws a contrast. that's what campaigns do. i think it was a poor judgment on his part and hurt the
credibility that he otherwise has as somebody of stature. >> matt, as we get further away from the actual event, will there be some questions that we just heard about, the way yemen is being protected right now. it was on an anniversary of september 11th. with we were told we ramped up security at all of our embassies around the world. is there going to be questions as to whether we really were in a state of preparedness for this? >> i suppose there can always be questions i think. but the first line of defense for embassies abroad is the country is supposed to provide security. when we have embassies, the country is responsible for providing the security. >> talking about countries where there's governments that aren't really in control. >> i understand that. >> that changes the whole dynamic. we've seen it across the middle east. >> if you don't have a government in control of its people, all more reason to have more significant fort cases around their embassies.
this is pretty much foreign policy 101. >> can romney then in your view, can he weigh in as a candidate? is it ever appropriate to weigh in on national defense or on foreign policy? >> of course. they'll be major debates on that. debates totally devoted to this. >> it was the timing and the optics -- >> it's the opportunism -- i think most people, maybe swing voters or undecided people will look at people and say here is a potentially plausible alternative if i'm happy and want to make a change, but you still want a presidential temperament saying i'm not looking just to score points at a time of obvious peril. >> the appeasement argument is going to be a big part of this election i think. i think that's where they felt we have an opportunity to press this -- the deferential stance that was supposed to help with us globally instead of being the big americans that come in and
control everything, the one where we're much more standoffish. on the far right they'd say apologizing -- the chickens have come home to roost as reverent wright said. >> it's a troubling narrative of weakness and making statements that are -- can be perceived as miscues. >> what do you think mccain will say when we talk to him at 8:30? >> mccain is a defense of america hawk, as we all know. i don't know exactly what he's going to say. but i'm going to be watching. >> we don't either. juliana and matt, thank you both for coming in. we hope to see you again. in the next hour, as we were talking about, senator john mccain will be speaking out on the floor of the sen nat. he'll be speaking with us in the next hour. yesterday he spoke out on the floor of the senate about the situation. he was a personal friend of ambassador stevens. senator mccain will be joining us live in the next hour. squawk will be right back.
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make sure that the statements that you make are backed up by the facts and that you've thought through the ramifications before you make them. >> we'll talk foreign policy and politics with senator john mccain. and breaking economic data. we will get weekly jobless claims at 8:30 a.m. eastern. the third hour of "squawk box" begins right now. welcome back to "squawk box" on cnbc. i'm joe kernan along with becky quick and andrew ross sorkin. our guest host this morning since 7 clong a.m., phil purcell, former chairman and ceo at morgan stanley. i guess my boss at dean witter. i had bob hunting. >> he was a good friend. >> you didn't know of him? >> later i learned.
>> there was some legal issues, but that's neither here nor there. no, there weren't. that's a joke. i didn't have that many clients by then. u.s. equity futures are hour indicated up about seven points. in our headlines, becky, everybody is waiting for bernanke. >> all about the federal reserve. the fomc wrapping up the two-day meeting today. make sure to tune in at 12:15 to find out if the central bank will launch a round of quantitative easing. cnbc brings you the latest fed announcements on monetary policy, barclay's barry knapp and a lot more. at 2:15 eastern, the fed chairman, ben bernanke will be holding a press conference to try to explain the fed's latest move. we will have the entire news conference live with our coverage beginning at 2:00 p.m. eastern. the market yesterday closed at a 4 1/2 year high.
apple shares bouncing around after the unveiling of the iphone 5. we hear it's thinner, lighter, made entirely of glass and aluminum. earlier on "squawk box" we spoke to brian marshall of isi and asked him about the experience. >> the product came in from what we're expecting, when i actually touched the iphone 5, got to play around with it a little bit was blown away. once you get it in your hands, you'll feel much different than your iphone 4s. >> shares of apple in the meantime have been bouncing quite a bit, up by $5.40, 6.75.21 is the latest. some saying they're looking for quadruple digit numbers. 1111 is what analyst told us. in the middle east prote protesters storming the u.s. embassy.
witnesses saying security forces fired shots. anti-american protests across the middle east continuing in several countries. we'll get an undate from nbc's richard engel in just a few minutes. we've also been watching everything that's been happening throughout the mashts as we mentioned before. futures are just slightly higher at this point, up by about seven points. people waiting to hear what happens with the fed. we veal more on that story in a bit. dick co-voss vich's comments yesterday struck quite a nerve. here is what he has to say. >> this crisis was caused by ability eight investment banks and 12 savings and loans. period. so 20 financial institutions caused this crisis. >> steve crawford, the co-founder of center view partners and a former co-president at morgan stanley.
our guest host is phil purcell. steve, i gather that this comment got a bit under your skin. >> well, i think it was a bit hyperbolic. i'm no fan of how some of these institutions were managed going into the crisis, but it ignores a whole host of other primary actors in the crisis. to me it's a bit like blaming the tobacco companies for lung cancers and ab solving people who smoke. in fact, it's a little bit worse. at least in the tobacco industry they tax the people who buy cigarettes and make them put horrific warnings on the labels. in the case of finance, we actually incent people to borrow as much money as possible. >> some would argue the regulation wasn't there? >> what's regulation? >> that's the point you're trying to make. what i'm suggesting is when you look at cigarettes, you talk about the tax and the labels, there are some people who say the banking industry wasn't
regulated enough and, therefore, this was allowed to happen. >> well, there's no doubt that the banks contributed to it. but to say that the banks weren't regulated i think is incredible overstatement. if that's the case, i don't know what we've done -- look at the staffing in all the different regulatory agencies. >> did you see the whole interview? >> yeah. >> his point was the fed had full authority to have, you know, constrained a lot of the activities. >> he basically said all the laws on the books they could have used and they just didn't. >> that absolutely is the case. i agreed with that and i find it not accurate when a lot of people say they didn't have the ability to regulate morgan stanley or goldman sachs. phil and i knew, if the fed decided to knock on our door, irrespective of what the particulars of the law said, that was an organization that you listened to. >> they had a lot on their plate, too, in inflating -- in all the easy money and 0%
interest, they were preoccupied with that. they're not going to come after you, are they sf. >> the issue i had with that statement and the other statement about pry pry tear trading had nothing to do with the trading, i think it points people in the wrong direction. >> where was the proprietary trading -- >> i think what dick also said was proprietary trading had -- that's true only on a very cursory level. >> do the noncursory level? >> if you look at proprietary trading the assets are opaque, the liabilities are fickle, the accounting is volatile and the fear of contagious is very real. >> when you look at it, everybody -- when things were really difficult, everybody thought morgan stanley and goldman sachs were next. why? because their business is in the sales and trading business which has those characteristics. it wasn't necessarily a $5 billion or $6 billion loss that was going to hit the capital
account, but there was a potential domino effect in the industry. >> do you agree with the view that certain institutions trading below book should consider splitting themselves up? >> absolutely -- it's been a long time. when you look at it, there are aspects of their business that are traded else wa for much higher values, i think that the shareholders -- i don't know how quickly this is going to reverse itself. but there's a belief that there's a diffusion of responsibility as these organizations get larger. and, you know, the reputational risks of trying to manage them as they get larger is also substantial. >> would you break all the -- >> no, not at all. i think one of the real -- one of the real practical things you have to deal with is funding. and the reality is funding institutions, particularly as you break them up, is very
complicated. so i think it definitely requires a lot of analysis, something that has to be looked at. financial services in general is being pushed to move away from wholesale funding towards insured deposit funding. >> but do you agree with phil's point, though, that it could make a lot of sense from the shareholder's perspective? >> absolutely. when you look at -- gist one very compelling example in the case of citi, you have one business that represents in theory two-thirds of its market cap. i think as a board i don't know how you can't be looking at those type of issues seriously. >> i asked phil about what he thought of morgan stanley today. they just finished up acquiring the rest of smith barney. is that the right strategy? >> you talked a little bit before i came on about sick lar cal /* cyclical or secular, i'm not sure in any of our lifetimes we'll see a secular uptick like
the 25 years i had in the business. there will be cycles. i'm not sure we'll see the same type of growth. i think the sales and trading business, while it will have ups and downs, there's a secular trend in that business. so, yeah, i agree with the strategy of trying to invest in other areas. >> you ever do the math of 780 to 14,000, where we'd have to go? >> yeah. >> if we did a quarter of that, it would be exciting, wouldn't it? >> you've got to stop dreaming. >> it happened once, didn't it? >> it did. it's not going to happen in my life. >> you remember granville's big call in '82, dressed up like a pharaoh. the market crashed, it went down 27 points. >> there's other times to have that type of run. other opportunities to invest below 14,000. >> you think we're high here? >> just a little bit. i'm not going to go there.
>> the multiples aren't high, are they? >> yeah, when you look at the best long run predictors of market value, cyclicly adjusted -- >> where will i be able to invest to get my high price? >> i'm not giving investment advice. >> qe 3. you got a view? >> yeah. this isn't really quick. when you look at what happened to the fed's balance sheet it's extraordinary. 2008 less than a trillion dollars. they had about a $900 billion balance sheet, $400 billion in equity, less than $500 billion securities portfolio. if you stress that with the duration of two years, there's about $12 billion loss against $40 billion in equity. today, $3 trillion balance sheet, $50 billion in equity. leverages grew from 20 to 1 to 50 to 1. the same hundred point stress test, $200 billion loss.
and you have that conversation at lunch and people just go on to eat their appetizer. >> steve, having said that, wouldn't you predict that today the fed will take more dramatic action than anybody is predicting and the explanation for that i suspect is that the fed sees economic numbers that are worse -- >> absolutely. and not getting help anywhere else, no help. >> we have to leave it there. steve crawford, thanks for coming in. >> my pleasure. in cairo anti-american protests continue there. nbc news chief foreign correspondent richard engel joins us. still teargas canisters going off near the embassy last time we spoke with you. >> reporter: this has been ebbing and flowing. it seems to have calmed down. we've seen a development over the last few minutes in which the protesters just on the edge of tahrir square are fighting
with riot police in front of the u.s. embassy. some of these protesters have been firing -- have been throwing molotov cocktails. there's quite a bit of teargas. the situation has not quieted down here at all. we've also been told that at least one person has been killed, not here, but in yemen. that was a demonstrators who was killed trying to assault the u.s. embassy in the yemeni capital of sana'a. we're getting word from the u.s. state department that all american diplomatic person at the embassy in sanaa appear to be safe and accounted for. >> richard, thank you for the coverage you brought us this morning. we will continue to watch through throughout the day. richard engel is nbc's chief foreign correspondent. joe? >> dealing with important people here. anyway, coming up, more from our guest host, former morgan stanley chairman and ceo phil
purcell. the violence in libya becoming an issue for the presidential campaign? you got to watch this. i don't know if it's must-see. do we use that term anymore? senator john mccain will join us in the next half hour to talk about the u.s. response and what it could mean for the november election. sion? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
welcome back, more from our guest host phil purcell who has been talking to us all morning long. you were saying before the break that in your best guest the fed is going to do more today than people are even expecting. what makes you think that? >> i don't think they can do anything after today, between now and the election. the next meeting i think is no action. i just suspect that given the announcement they made in jackson hole and the concerns that expressed about the economy, my feeling is that they've got data on the economy that's probably worse than what we're seeing, and that, therefore, they will take the most dramatic action they can
today. so we seal see more easing and more than people are predicting. i heard steve leisman earlier. he had all those statistics. everybody is predicting they do something. but to me i think they'll be more aggressive than people are anticipating. we'll see. >> we'll see what happens. you just heard what steve said, steve crawford, how he laid out this is getting to be a bigger and bigger and bigger issue and how you ever start to unwind it is anybody's guess at this point. also, 60% of the economists steve has spoken with think more quantitative easing is not going to help the unemployment picture. so to what end? >> i think the chairman of the federal reserve and the board members disagree with the 60% of the economists, that it will not help the economy. i think they believe -- these are very smart learned people. i think they believe more quantitative easing will help the economy and that's why they're doing it. they're not getting -- as we talked earlier, they're not getting any help out of congress
or out of the administration on the fiscal side. so i think they're trying to do the best they can to keep the economy in positive territory. >> if we don't hear as much as you're talking about in terms of fire power from bernanke or as much as the market is expecting, what do you think happens? >> i think it will have a quick impact on the interest rates. and i personally don't think it will have any impact on the economy. i don't think this third easing is going to really help the economy. people a lot closer to it and a lot smarter than i am do. so i think the only impact would be what it does to interest rates. >> what about what it does to the stock market? there are some people who think the stock market has built all this -- >> it will sell off. if they do nothing, i would expect it to sell off. >> if the argument is nothing is going to happen with the economy, arguably nothing is going to happen with the stock
market. >> that is correct. you know better than anybody. the stock market trades on a lot more than fundamentals and emotionally this will be a negative. >> one other thing you talked about before was this idea of raising capital when the regulators came around and tried to fix the banks. you said that was a good idea. we had two guests yesterday, dick kovacevich and bill isaac who said the problem with some of these things is it's not weighted in such a way where you're forcing the banks to save more and put more capital aside during those real boom times. it's a countercyclical where you're asking them to raise money and put things aside when it's the worst possible timing. do you have any thoughts on that? >> yeah. i almost have a soap box i get on on that issue, because i'm old enough that i ran a financial before arthur leavitt changed the rules. the rules originally was you
would figure out what your losses would be over a long period of timed and you reserved so you would have reserves when those losses came. arthur leavitt and the sec decided that was managing earnings. so they passed new accounting standards to say you couldn't -- if you couldn't see the loss, you can't reserve for it. so what that does is it forces you into doing exactly the wrong thing at the wrong time. so instead of overreserving in the good times and underreserving in the bad to cushion the blows, they changed the accounting rules so you do just the opposite. in the good times you reserve nothing. in the bad times you have to overreserve. that's why the banks in the last couple years have been emptying reserves. they overreserved. both are wrong. it's something that i hope the policymakers look at and say,
no, we should be countercyclical, not pro cyclical in terms of accounting policies for financials. you know about what your loss is going to be long-term, and you should approve for it in the good times and empty the reserves in the bad times. we're doing it crazy. >> with all the regulation that's been brought up, with all the other ways of taking a look at the banks, that hasn't been an issue that has really been discussed. >> well, it should be. it would be a very easy thing to fix, and everybody in the business including in my experience the smart accountants agree we should go anti-cyclical and recognize we're not trying to manage earnings, what we're trying to do is strengthen the balance sheet in the good times so it won't be devastating in the bad times. so hopefully as time goes by, cooler heads will come back and we'll go anti-cyclical with our reserve policies. >> before we let you go -- we're
not going to let you go. before we go to a break, one quick thing. when you look at wall street five, ten years ago, is morgan stanley, goldman sachs, all the names we know, is that hierarchy still exist? is blackrock -- how does it change in your mind? >> one of the favorite things in wall street, and i'm sure you've seen it, is to take the old tombstones and cross out the names. you get a tombstone from '75 or something, and i guess 5% at the most are still around. so wall street is a -- it is a tough business. it's easy to make mistakes. you end up going out of business or you end up selling. in five years there won't be a lot of change. in ten years there will. the winners will be the guys who run their business and risk manage it so they make a profit. the losers will be less profitable and either get bought or go away. i think to answer your question
specifically, morgan stanley and goldman sachs will still be there, they'll still be on top. >> okay. we're going to continue this conversation. phil is not going anywhere. coming up, the politics of foreign policy. we have senator john mccain who is going to join us to talk about the u.s. response to the violence in libya. at 8:30 a.m. eastern, breaking economic data. weekly jobless claims and producer pricing numbers for august. wheel bring you the number and the market reaction. fed chairman ben bernanke arriving for the final day of the fomc. the fed expected to release the policy statement at 12:30 today. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim.
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welcome back to "squawk box" everyone. we are seconds away from the weekly jobless claims and producer pricing index numbers for august. rick santelli is standing by and steve leisman joins us from washington, d.c. that's where we'll hear more from the federal reserve today, the fomc. in their second day of meetings, 12:15 is when we'll hear from ben bernanke or get the statement from them. right now, rick, take it away with those numbers.
>> all right. 382,000 on jobless. 1.7 on headline ppi. what was food and energy? up what? >> two-six. >> no. those are year over year. as you can see, we're having some issues -- up .2. okay. up .2. i tell you what -- here we go. we have them scrolling. the 1.7 is disturbing. it was somewhat expected. in the up .2, when you strip out food and energy makes total sense. the 382,000 on jobless comes from a revised 367. so we're up, what, 15,000. on jobless, i'll defer to steve. the people i'm talking to at this point in the game, i'm hearing anywhere between 350 and 400 just doesn't excite people anymore other thanks you know, trading a little bit on the
machinations of how it moves. we're still left with a market that's hovering in the 170s on a ten-year. 290 on a third year. this is after we saw a little moderation. the dutch elections actually went right down kind of pro europe. so we're going to have to assimilate some of this new political information. back to you. >> all right, rick. stick around for a minute. steve, why don't you weigh in on this. the 382 for the weekly jobless claims, up 15,000, how does that go when it goes into the fed's machinations? >> i think the direction matters quite a bit. you know, we've been out from a bottom of 350. the range is 350 to 400. if we start to creep up, certainly you can expect no help from the jobless claims numbers when it comes to the overall payroll reports. i would have some concern about the rise of 15,000. i would suggest that it at least is not telling us the job market is strengthening. if anything, it raises a reg flag that perhaps it's weakening. 400 is the place where you'll
get excited. if we're going to bounce around in this range, i guess it's okay. still suggesting maybe 100,000, maybe 100,000 plus when it comes to jobs. certainly we want to see 350 and below. >> steve, what i was just saying, we're all watching these next -- how many do we have left, two or three? >> two more. >> you see something like this and you saw the participation rate. we know a lot of the fall, we talked about it earlier, has not necessarily been a lot of job growth, but it's been a lot of people leaving the workforce. i'm not saying they do it on purpose or there's a conspiracy. i'm not saying that today. but how many times can you go back to that well to count on getting under 8% by november, how many times can you go back to that well without really having the actual job growth? aren't we getting close to the point where you can't keep doing it that way? >> who is doing it, joe? >> i'm saying in general.
>> can the trend, at 63 -- >> i guess there's a point at which you would end the declined in the participation rate. there's a limit to how far it can fall. >> i'm saying you can't keep counting on that to do it. >> we know we're going to be losing people from the retirement. the work i've seen, it's about half of the decline and participation rate. the other half may be discouraging, maybe slightly more than half. you have the other problem. you a stronger job market, you'd have people coming back in saying i'm looking for work now, i'm part of the people looking for work. that would raise the unemployment rate. i do want to talk about the producer price numbers which are not all that significant by themselves. the 1.7% gets down to 0.2, as rick said, if you take out food and energy. there's a little bit of pipeline inflation pressure when i look at what are called crude goods, unprocessed goods, for example,
taking out food and energy, that's up 2.2%, probably result of the drought, up 4.6% when it comes to feed and food stuffs. the estimate for friday, joe, is that the cpi is going to show up 0.6% which is one of the highest since 2009. here you have a situation where the fed is probably going to be doing additional quantitative easing a day before the consumer pricing. >> if you add back the people at 11%, if you use u 6, we're at 14%. >> 14.7. >> how long can we keep saying -- how long can we keep saying the private sector is doing fine? >> well, you know, i would say this, when you have the head of the federal reserve in testimony on capitol hill talking to jackson hole somewhat optimistic about the employment improvement without talking about the drop
in the labor force participation rate, i rft my case. here is a man that is well educated as they come. he goes in front and tries to talk us into these negotiations that are impossible to prove, how his programs are having an effect that no independent research can back up, but then, when everybody in the real world is looking at a labor force participation rate, the lowest since 1981, he talks about how his programs are improving employment. he should be talking about quantitative two plus two equal four. he doesn't. he's not wrong. he picking his priorities in a way that he wants to put forth. >> it's wrong to say the entire decline of the unemployment rate is a result of the participation rate. some of it came from actual job growth. >> we know that. >> which is in the payroll. rick is overstating the case although there's some truth on it. >> i want to end on rick because we have to go to mccain.
see yeah. you're done. the u.s. reaction to the killings in libya which was so tragic for all of us yesterday, taking on a political tone which is also tragic that we're not focusing on the actual event itself in the president election. that's the biggest tragedy to some extent, senator mccain. all this crap, all this side show doesn't do justice -- it doesn't show enough respect to the actual event itself. >> i think you're right. i think the whole context of the united states leadership in the world, but specifically in the middle east is something we need to discuss. chris stevens was a friend of mine. he was a dear man, he went to ben gas zi on a cargo ship. his wife lived in a hotel there. his life was in danger every day. he was a great man. he loved the libyans and the last thing that he wants is for
the united states to not continue to help the libyans. by the way, he voted for a moderate government and not an islamic government. we need to talk about the united states position in the middle east. in the middle east they believe we are leaving. unfortunately they are correct. >> senator, it's been pointed out -- there's a lot of republicans, when you were running, there were a lot of republicans, too, they're not monolithic. a lot have their own agenda. everybody is pointing the the republican criticism that candidate romney, that was leveled at him yesterday to sort of say that obviously he was wrong. what do you make of it? if it's bipartisan criticism, was he wrong? >> i think it's important to understand the timeline here. without going through all the tick-to being, when they issued that statement, it was in response to a very weak statement from the u.s. embassy in egypt.
that's what triggered this whole situation. i know that mitt romney cares deeply about the tragedy of the loss of four american lives. i know he cares deeply about what the united states -- what's happening to our embassies in yemen, egypt and other places. but also he cares a lot about the fact that we're in a near confrontation with israel, iraq is unravel elg because we didn't leave the residual force. karzai is acting more and more aberrational. the president of the united states has not said a single word on behalf of the syrians, 20,000 of whom have been massacred. >> the point we keep hearing from -- in republican circles, that a deferential policy or policy of appeasement or apology, it's hard for me to really connect the dots on such
a volatile place, that there's a cause and effect there. is it political or is there something to that? >> i don't think it's appeasement. i think the president of the united states does not believe in american exceptionalism. when a million and a half iranians were demonstrating in 2009, obama, obama, are you with us o or with them, he did basically nothing. in the face of the 30,000 killed and massacred in syria, there's no leadership. in the case of iraq, we should have left a residual force. i can tell you it's unraveling, the latest being maliki allowing iranians to overfly iraq and bring weapons into syria. that's one of the influences there. what i'm saying is we need more robust american leadership because that's -- if the united states doesn't lead, then i
would ask who do you want to lead? obviously that's not a good option. by the way, could i just add, i know americans are war weary. i know they're tired of iraq and afghanistan, but we cannot allow that whole part of the world to unravel the way that it is proceeding to do now because of aa lack of american leadership. >> senator, you mentioned karzai in afghanistan. he issued a statement where he said he was very unhappy to hear about that film that had gone out. he said nothing about any of the embassies being overrun. look at the same situation, they've not really come out and condemned any of the attacks and you have people starting the look at the american aid that flows there, over $1.5 billion flowing to egypt. you point out more need to be done. right now the american public is going to push back and say they want to give less. how do you deal with that as a senator, trying to figure ot what we should be sending to who?
>> first, i think you're right, that the american people have every reason to be dissatisfied, particularly in light of the vigorous argument that just preceded me being on. but egypt is vital. it's the heart and soul of the arab world as you know. karzai is acting the way he's acting because america keeps announcing they're leaving and withdrawing. he has to live in the neighborhood. i've known him for 12 years now. he is a very mercurial individuals. all these people in the region are making adjustments for an absence or withdraw of american leadership. americans i believe must be led and explained why egypt is important to us. by the way, morsi, the president of egypt did condemn belatedly these attacks on the embassy, but certainly not enough. so we've got to adjust to a whole change environment as a result of this arab spring.
there are good things that happen about people obtaining freedom. but there's also enormous dangers, including going back to libya. libya has been infiltrated by al qaeda, infiltrated by jihadist. no ve people voted overwhelmingly to reject islamists and voted for moderation. >> senator, we're told -- we've seen the security ramp up every anniversary, every year when september 11th comes up, we're told our embassies are on high alert. we know in terms of the high. 11 years later, it's not too late to talk about a security
lapse. will there be questions as to whether there was enough security. you can't anticipate all these things in a tinder box like the middle east. is that something that needs to be asked? is where was the protection for the libyan embassy on september 11, 2012. >> you're exactly right. the consulate in benghazi was probably prepared for riots and mobs and demonstrations such as we've seen in yemen and egypt. this kind of well orchestrated, well armed terrorist attack and maybe we should have been. i don't think -- we knew al qaeda was in the country. we knew they were causing trouble particularly in the east. these kinds of things are very hard to predict. they're a well orchestrated terrorist operation such as this. >> is romney in a position to start weighing in on foreign
policy? i wonder whether he'll be criticized for that. you can't speak for united states when you're a candidate. past candidates have done it. >> ronald reagan did it best as i recall back in 2000. it's got to be part of the discussion. one of the debates is going to be devoted to foreign policy. i would hope that mitt romney could give a comprehensive foreign policy speech. >> this administration believes -- doesn't believe in exceptionalism in my view. that accounts for a lot of the things you do which i certainly have disapproved of. >> senator, thanks for your time today. i appreciate it. thanks for coming on. >> thanks for having me. >> when we come back, we'll have
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welcome back to squawk box everyone. we have additional headlines concerning all the unrest in the middle east. at this point youtube has blocked a video in egypt and libya that attacks islam's prophet muhammad. outrage is what sparked the protest in the middle east. obviously there were simmering undercurrents there for a long time. that video is getting the blame for why this happened now. in the meantime afghan authorities have ordered the youtube website be shut down indefinitely to try to stop afghans from watching the u.s.-made film. when we come back, markets will be watching for the fed's policy announcement today. up next we'll head down to the new york stock exchange for the latest buzz on qe 3 and chairman bernan bernanke's news conference today.
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382, as steve liesman pointed out sh maybe there is some room for them to jump in. >> i got the 220 analysis, the futures went down immediately after the statement and the headline we wrote was fed did not do enough. shoot, i'm sorry. that's the 230 story. in light of jobless claims, fed did not do enough. that's the story. we know it, so why not write it down, put it out for 230. >> is there any way they could do enough? >> it's imper cal. the news analysis has been done ahead of the meeting. >> now to the political implications, too, because you're going to see scott garrett talking today about how the fed is wading into the fiscal authority arena congress is supposed to be in charge of. congress hasn't done their job, so maybe they've led them there. >> keep rates low, we will hear they're out of bullets. you know, in light of the
spanish bonds reversing direction, we'll hear that we're back to square one. i don't believe any of it. we're in an earnings vacuum. the ones we do have are okay and i continue to believe things are fine, but the fed did not do enough is what guys will come on and say. it's like a script. >> we're going to hit 130. >> phil thinks something big's going to happen. >> to me, the euro is the story. anything that says europe is off the front pages is fantastic. >> it's true. helpful for our market, but not off the front page. >> it's europe and qe3. >> that's not a great help for germany there, that euro going up. >> german ten-year is doing better. guys, look, i'm just saying given where we are, it's going to be more talk, less action.
it would be great if mr. purcell's right. at the end of the day, there's the fed versus apple and apple looks good. the futures come back, stabilize, we get the money managers trying to catch up the performance. that's the story. >> we can go home now. >> i'm 90 years old. i saw this movie. i remember this. this is the 1998 -- >> what am i going to be doing at 3:45? >> rejoicing at 9:40 today. >> thank you. see you in just a few minutes. >> coming up, parting shot from our guest host, former morgan stanley chairman and ceo. [ male announcer ] for the saver, and a big first step.
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about the iphone, but you have something going on. you have an investment in an app on an iphone that has to do with finance. >> that is true. i've got an investment in a little company called level up, which is very exciting. it's mobile payments and what's different with level up, they actually transact business. done over a million transactions. you get a mobile receipt. you get rewards. so, it's really a reward-based program and so far, they've done a million transactions and they've got about 3,000 merchants in eight markets. it's, it's exciting to me because it's like discover card. they have to go out and get merchants. they have to get mobile phone users. they don't have any of them and everybody says it can't be done, so put some money in because i think it will.
>> it's a little bit like what starbucks is trying to do and scare. the as little different. >> square is different in that you have to attach something to your phone and slide a card. this, all you have to do is punch your -- >> phil, one quick question. >> oh, wow. >> you push this up, they take a picture, you're done. 15 seconds. you got a receipt. >> we got 15 seconds. if you could be a ceo today of a wall street bank, and i know you're retired now and i'm not suggests you want to come out of retirement. 20 years younger. would you want to be a ceo today? >> i don't think so. i got to be one and loved every day of it. it was a lot of fun. and a good time. right